Loma Negra Compañía Industrial Argentina Sociedad Anónima Q3 FY2024 earnings call

• Industry volume showed a strong sequential improvement of 25% but was still below last year's level.
• Top line reached ARS 180.7 billion, down 21.2% primarily due to lower cement dispatches.
• Consolidated adjusted EBITDA was $55 million or ARS 43 billion, down 18.5%, with EBITDA margin at 24% (up 78bps year-over-year).
• Balance sheet strengthened with net debt at $177 million and net debt-to-EBITDA ratio at 1.03x.
• Cement segment had cost management efforts, energy inputs tightened margins sequentially but improved year-over-year.
• Concrete segment saw margin expansion due to cost control and sale of obsolete assets.
• Aggregates segment was impacted by low activity and competitive environment with negative margin.
• Railway segment had margin expansion due to moderate volume decline, positive price performance, and strict cost control.

For the third quarter, the top line reached ARS 180.7 billion, a 21.2% decrease. The cement, masonry cement and lime segment declined by 21%, with volumes contracting 17.1% year-on-year. Concrete revenues decreased by 29.7% due to a 22% drop in dispatches. The aggregates segment experienced a 42.7% decline with sales volume down by 29%. Railroad revenue saw a modest decline of 4.7% with transported volumes dropping by 7% but partially offset by increased grains and chemicals transport. Adjusted EBITDA: cement segment at 25.5% (slight drop), concrete at 4%, aggregates at negative 17%, railway at 12.6%. Revenue contributions: Cement, masonry cement and lime segment was a major part, followed by concrete, aggregates, and railroad.

• The recovery is in early stage but monitoring economic challenges like inflation and interest rate decline.
• Expect growth in construction sector due to expansion of credit and mortgage loan.
• Country risk below 1000 points signals positive for attracting foreign investment, indicating growth potential to be unlocked.

Q: How do you see pricing dynamics moving forward with inflation slowing and what effect on volumes and revenues?

A: Looking to adjust prices monthly; with lower monthly inflation, may start adjusting less frequently; bag cement recovering faster than bulk cement.

Q: What catalyst for larger construction projects to begin and bulk cement demand to pick up?

A: RIGI and other big projects starting to gain pace, public works with private sector involvement expected to impact next year.

Q: Related to dividends, any plans?

A: No plans for this year; analyzing capital allocation alternatives for shareholders.

Q: Does InterCement situation impose debt repayment covenants on Loma Negra if control changes?

A: No covenant regarding change of control impacting the company; tender regulations of NYC and CMB apply if operation occurs.

Q: Detail on 25-kilo bag project and cement volume sequential recovery?

A: 25-kilo bag project part of strategy; volumes saw recovery starting in July, with potential two-digit growth in volumes next year.

Q: Color on mortgage market recovery in Argentina?

A: Real estate sales recovering, which could boost future construction projects and cement sales.